MS Cuts Bay Area Bonuses

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MS Cuts Bay Area Bonuses

Microsoft said on Thursday it will reduce take-home pay for 1,600 workers in Silicon Valley later this year because it has determined that a "geographic differential" it had put in place two years ago is no longer needed to retain employees.

Under the new pay system, which will take effect in August, San Francisco and Silicon Valley workers will receive a 15 percent differential or bonus, on top of their regular salaries, instead of the current 25 percent premium. Microsoft stressed that the differential was never presented as a permanent salary increase.

Although this additional money helps workers pay for homes in one of the most expensive housing markets in the country, Microsoft (MSFT) said its real purpose was to help the company retain its talent.

After a year of recession, housing prices here have fallen only moderately but the job market had changed dramatically in Microsoft's favor. A company spokeswoman said that voluntary attrition among Microsoft employees in the San Francisco Bay Area has fallen from close to 30 percent when the geographic differentials were put into place, to less than 10 percent.

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Xbox comes to Europe: Microsoft launched its Xbox game console across Europe on Thursday, completing the third and last leg of its entry into the $20 billion video game market.

The supercharged gaming machine is already on sale in the United States and Japan, with a global marketing budget of $500 million.

Microsoft (MSFT) said the Xbox launch had gone smoothly across Europe, where parties were held in more than a dozen nations and retailers threw open their doors at midnight to sell it.

Electronics shop Fona opened in the Danish capital of Copenhagen for an hour overnight and received up to 200 customers.

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Media must diversify: AOL Time Warner's chief executive said Thursday that the downturn in the global advertising industry was easing. But he also advised media companies to find other revenue sources.

"There has been an advertising depression for the last year, year and a half," Gerald Levin told a gathering of media representatives in the Indian capital. "That has made advertising revenue much more difficult. But that's starting to turn around."

Levin said media companies must learn to diversify revenue sources. "There should be at least two to three revenue streams," Levin said.

Levin is in India to discuss collaboration with Indian companies to market AOL Time Warner's (AOL) products. The U.S. media giant has formed a joint venture with India's largest television and entertainment company, Zee Telefilms, to market its channels in South Asia.

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New interest in Global Crossing: Fiber Optek Interconnect, a privately owned installer of fiber-optic communications networks, said Thursday it may make a bid to acquire bankrupt high-speed network operator Global Crossing.

The company said it is in talks with an institutional lender regarding potential financing for any offer, and it is open to other parties joining to make a bid. It believes the downturn in the telecommunications industry is over, and Global Crossing (GBLXQ) has "significant value" as an operating entity.

Global Crossing, which filed for Chapter 11 bankruptcy protection in January, said on Monday that more than 40 firms were weighing offers for the company. Ultimately, the bankruptcy court will decide who wins.

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Paying with mobile phones: Rival heavyweight mobile operators Vodafone Group (VOD) and T-Mobile teamed up on Thursday to allow Britons and Germans to pay for goods with the touch of a button on their handsets.

The initiative is part of a drive by mobile operators to boost revenues by encouraging subscribers to use their handsets for sophisticated data services rather than just voice calls.

Vodafone and T-Mobile, owned by Deutsche Telekom (DT), plan to launch the platform toward the end of the year, initially in their home markets of Britain and Germany.

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Cutting back: Hit hard by the online advertising downturn, Web portal Lycos Europe said on Thursday it was laying off 200 employees to ensure it meets its break-even target later this year.

The layoffs, representing 18 percent of the total workforce, are the second phase of a restructuring plan instituted last year as the company's primary revenue stream – advertising – continues to slide sharply. Upon completion of the latest round of restructuring, the 5-year-old company will have reduced headcount from 1,400 last September to 900, the company said.

Lycos Europe's largest shareholders are Bertelsmann and Terra Lycos. Terra Lycos is the parent company of Wired News.

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Handsets profitable: Motorola, the world's second-largest cell-phone maker, said on Thursday its handset unit was profitable, and a new focus on less-expensive phones will help it add up to two percentage points of market share in 2002.

"We're slightly above break-even right now; we have stabilized and started to gain market share," said Mike Zafirovski, president of Motorola's (MOT) Personal Communications Sector.